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ExxonMobil was expected to announce today a partnership with genomics innovator J. Craig Venter's company, Synthetic Genomics, in a $600 million effort to produce fuel from algae. Emil Jacobs, an ExxonMobil research-and-development executive, said the company has spent years researching alternative fuels and that plants producing algae-based commercial fuel are still five to 10 years away.

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Several algae-based biofuel developers, including some with oil-industry backing, are racing to achieve commercial-scale production, executives and analysts said. "Commercial production of crude oil from algae is the most obvious and most economical possible way to substitute petroleum," said Jason Pyle of Sapphire Energy. "Oils from algae hold significant potential as economically viable, low-emission transportation fuels and could become a critical new energy source," added Emil Jacobs, vice president of research and development at ExxonMobil.

Synthetic Genomics, Sapphire Energy, Verenium and Kent BioEnergy are among the algae-based biofuel developers in San Diego that have raised millions of dollars from private investors, including oil giants ExxonMobil and BP. But while private investors have given strong backing for algal fuels, the government's support for the emerging technology "is very inadequate," said Tim Zenk, Sapphire Energy vice president of corporate affairs.

Algae-based biofuels "could be a meaningful part of the solution" to produce economic low-carbon fuels, said Emil Jacobs, an executive for ExxonMobil, at an energy summit in the United Arab Emirates. Jacobs said that while "significant work" is needed to produce fuel from algae, all options must be investigated to meet the projected 35% increase in energy demand during the next two decades.

Shell and ExxonMobil have put millions into research on producing biofuel from photosynthetic algae. "While significant work and years of research and development still must be completed, if successful, algae-based fuels could help meet the world's growing demand for transportation fuel while reducing greenhouse-gas emissions," said ExxonMobil executive Michael Dolan.

Corporate giants are joining startups in investing millions in what may be the next green biofuel: algae. An algae-to-ethanol plant by Dow Chemical is in the works in Texas, while ExxonMobil is investing $600 million to develop algae-derived oil. Honeywell International is working with the aviation industry to create an algae-based jet fuel.